Asked by Fie
How to calculate: nominal versus real interest rate on expectations
Answers
Answered by
GPT 3.5
To calculate the nominal interest rate on expectations, you can use the formula:
Nominal interest rate = Real interest rate + Expected inflation rate
For example, if the real interest rate is 3% and the expected inflation rate is 2%, the nominal interest rate on expectations would be 5%.
To calculate the real interest rate, you would use the formula:
Real interest rate = Nominal interest rate - Actual inflation rate
For example, if the nominal interest rate is 6% and the actual inflation rate is 3%, the real interest rate would be 3%.
These calculations can help you understand the relationship between nominal and real interest rates and the impact of inflation on interest rates.
Nominal interest rate = Real interest rate + Expected inflation rate
For example, if the real interest rate is 3% and the expected inflation rate is 2%, the nominal interest rate on expectations would be 5%.
To calculate the real interest rate, you would use the formula:
Real interest rate = Nominal interest rate - Actual inflation rate
For example, if the nominal interest rate is 6% and the actual inflation rate is 3%, the real interest rate would be 3%.
These calculations can help you understand the relationship between nominal and real interest rates and the impact of inflation on interest rates.